Netflix raising prices for 58 million U.S. subscribers as costs rise

Netflix is raising its U.S. prices by 13 percent to 18 percent, its biggest increase since the company launched its video-streaming service 12 years ago.

Its most popular plan will see the largest hike, to $13 per month from $11. That option offers high-definition streaming on up to two internet-connected devices simultaneously. Even at the higher price, that plan is still cheaper than HBO, whose streaming service charges $15 per month.

The extra cash will help to pay for Netflix’s huge investment in original shows and films and finance the heavy debt it has assumed to ward off rivals such as Amazon, Disney, and AT&T.

Investors reacted enthusiastically to Tuesday’s news, signaling their belief that the price increase won’t significantly slow Netflix’s sub- scriber growth. The company’s stock surged $21.70 to finish at $354.64, its highest closing price in nearly three months.

This marks the fourth time that Netflix has raised its U.S. prices; the last hike came in late 2017. But this is the first time that higher prices will hit all 58 million U.S. subscribers, the number that Netflix reported at the end of September. (Netflix had nearly 79 million subscribers outside the U.S. as of September.)

Previously, Netflix had continued to offer a basic, $8-a-month streaming plan while raising rates on more comprehensive plans with better video quality and options to watch simultaneously on different devices.

This time, the price for the cheapest plan is going up to $9 per month. A premium plan offering ultra-high definition will jump to $16 per month from $14.

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience,” the company said.

The new prices will immediately affect all new subscribers and then roll out to existing customers during the next three months.

Higher prices could alienate subscribers and possibly even trigger a wave of cancellations. For instance, Netflix faced a huge backlash in 2011 when it unbundled video streaming from its older DVD-by-mail service, resulting in a 60 percent price increase for subscribers who wanted to keep both plans. Netflix lost 600,000 subscribers — about 2 percent of its total customers at the time — after that switch.